Bajaj Finance's margin pressures make brokerages bearish

Analysts said that the non-banking financial company's (NBFCs) are expected to be adversely impacted due to pressure on NIM, sticky costs, and higher .

Analysts at HSBC said that the remains firmly in the earnings cut cycle at rich valuations of 21 times FY26 Price-to-Earnings valuations.

"As the stock remains in earnings cut cycle, it will be difficult to find re-rating triggers, but it could compound still," said analysts Abhishek Murarka, Rahil Shah and Gaurav Sharma in a note.

Agencies

However, Bajaj Finance can avail funding at competitive costs and could gain market share compared to its peers, they said.

Nomura said Bajaj Finance reported a 'not-so-rosy quarter' and the outlook remains weak in the near term. While the management expects the cost of funds to peak by July-August 2024 and the regulatory ban on its two products 'eCOM' and 'lnsta EMI Card' to be lifted in FY25, the earnings would remain under pressure.

"The trends/ FY25 expectations for BAF are in-line with our thesis that FY25F would be a reset year for the entire NBFC space with growth/profitability moderation," said analysts at Nomura.